The Cabinet Committee on Privatisation (CCoP) has reportedly turned down recommendations of Privatisation Commission Board and approved a floor price of Rs166 per share for divestment of up to 250 million government shares in Habib Bank Limited (HBL).
Sources told Business Recorder that PC board, which met hours before the CCoP meeting, proposed Rs 170 per share floor price to the cabinet committee on privatisation meeting chaired by Finance Minister Ishaq Dar. However, the CCoP approved Rs 166 per share floor price - Rs 4 per share less than decided by the PC Board. An official said the floor price of Rs 166 per share suggested by the Finance Advisor was considered low by the PC board given the banking sector's performance and growth. The government expects to mobilise $500 million through divestment of 250 million shares out of total government shares of 609 million in HBL.
Sources said that the government also wanted to complete the transaction of 609 million - 42 per cent of its shares in HBL - in one transaction to mobilise around $1.3 billion but the PC board suggestion was to split the transaction into two phases as failure to complete the transaction in one go would have a negative impact on the entire process. The remaining 359.3 million shares may be available under the green-shoe option (shares to be exercised on the basis of demand). The finance minister has committed to the International Monetary Fund (IMF) during the sixth review of $6.64 billion Extended Fund Facility (EFF) that the government would carry out the divestment of government holding shares in HBL in two phases.
A statement issued after the meeting stated that the CCoP in its meeting approved the floor price of Rs 166 per share for divestment of government residual shares in HBL with a base size of 250 million shares.
According to the approved Offer for Sale Document (OFSD), the offer of HBL shares is being made only through the book building method to eligible international and domestic institutional investors and high-net worth individual investors (HNWI). The book building, the CCOP was informed, would start on Tuesday April 07, 2015 and conclude on Friday.
The Chairman Privatisation Commission, Mohammad Zubair, informed the Finance Minister that the PC Board considered the HBL pricing benchmarks, demand of investors at various price levels and other influencing factors as presented by the Financial Advisors and made its recommendations for the price at which government shares in HBL were to be offered.
The PC Board and CCoP will meet on Saturday April 11, 2015 to approve the strike price based on the final results of the book building process. Information Minister, Pervaiz Rashid, Federal Minister for Planning and Development, Ahsan Iqbal, Federal Minister for Petroleum & Natural Resources, Shahid Khaqan Abbasy, Commerce Minister, Khurram Dastgir, Minister for Port & Shipping, Kamran Michael, Chairman PC, Mohammad Zubair, Chairman Board of Investment, Miftah Ismail, Secretary Finance, Dr Waqar Masood, Advisor Finance Division, Rana Assad Amin, Chairman SECP Zafar ul Haq Hijazi and other senior officials from various ministries attended the meeting.
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